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TaxTMI 
TaxTMI 
TaxTMI 
2016 (2) TMI 1281
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....d officer. Therefore, the order passed is bad in law. 1.2 In starting the proceedings on the basis of AO's report and also erred in remanding matter to the AO again, therefore, there is no such independent application of mind. Therefore, the present order passed in bad in law and liable to be quashed. 2. In not appreciating the facts that the AO has completed the assessment only after satisfying himself on the points raised during assessment proceedings and after considering the detailed reply filed by the appellant before him and, therefore, the CIT has no jurisdiction to invoke the revisionary powers u/s.263 of the Act. 2.1 In not appreciating the facts that the AO after examining the details has adopted a possible opinion on the several points raised in the show cause notices issued by him and, therefore, the CIT lacks jurisdiction to invoke s.263 and he cannot seek to impose his own erroneous opinion on those facts to pass such an order. 2.2 The CIT also erred in passing the order u/s.263 even after perusing the detailed reply filed by the appellant and, therefore, the revision order is devoid of material to sustain such an action. 2.3 In not appreciating facts th....
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....bmitted various replies alongwith bank statements and also invoices PAN, Addresses of all the purchase parties in various box files and therefore, even on merits, the order passed by CIT is liable to be cancelled. 2. The brief facts of the case are that the assessee-company filed its return of income for the year under consideration on 26.09.2010 declaring total income of Rs. 59,07,546/-. The same was selected for scrutiny; accordingly, the Assessing Officer passed the assessment order u/s. 143(3) of the I.T. Act determining total income at Rs. 87,89,730/- on 30.03.2013. A proposal u/s.263 dated 16.07.2014 was received in the office of CIT-2, Surat from ACIT, Circle-4, Surat through the Jt.CIT, Range-4, Surat vide letter No.SRT/JCIT/Range-4/263/2014-15 dated 18.07.2014. The concerned Assessing Officer in the proposal has submitted that various issues remained to be verified during the course of assessment proceedings which had made the order erroneous in so far as it was prejudicial to the interest of revenue. For the same of convenience, the said proposal is reproduced as under:- "2. A proposal u/s.263 dated 16.07.2014 was received in this office from ACIT, Circle-4, Surat thro....
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....issued notices u/s.133(6) of the Act to these parties but replies were not received from both the parties. The A.O. had brought this fact to the notice of the assessee and asked it to submit the original bills of each and every transaction. The assessee did not submit the bills. Despite the fact that the notices u/s. 133(6) remained un-served and even assessee did not submit the copies of bills, the A.O. accepted the claim of payment on account of job work charges. This has resulted in the assessment order to be erroneous and prejudicial to the interest of revenue. 5. The company has given loan to Murli F. Sawlani and Harish F. Sawlani who have 10% share holding in the assessee company. The A.O. has not examined whether the provisions of section 2(22)(e) of the I. T. Act are attracted on this transaction. 6. I, therefore, propose to pass an order u/s. 263 of the Act so as to set-aside the assessment order passed by the Assessing Officer for the A.Y.2010-11 as it is erroneous and prejudicial to the interest of revenue. 7. In case, you have any objection to the proposed action, you are requested to appeal before me either personally or through your authorized representative on ....
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.... reference to so-called purchases inter alia in reference to applicability of section 2(22)(e). In fact, the specific query was raised and has been fully complied and thereafter after having satisfaction by the then Assessing Officer, he has not issued another show cause notice requiring further details to be submitted by the assessee, and therefore, we say that touching the same issue by way of revision is amount to change of opinion and same cannot be permitted. 7. It is said that, all the parties from whom the assessee has made purchases are assessed to tax and their books arc also audited. 8. That, as alleged in your notice para 2, you have stated that the notice u/s. 133(6) has been returned unserved in reference to party number 1,4,6,8. This issue has already been raised by the AO in his notice dated 18.03.2013, para (iv) and the query has already been compiled by the assessee vide submission dated 22.03.2013 and, therefore, the issue raises now by your honour in para 2 has been taken care by the AO by raising specific query. 9. In para 3, you have stated that the .said parties has made transactions only with the assessee. In this connection we say that first of all, th....
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....ollected. Kindly also refer Para (xiii) of this letter wherein we say that without prejudice, only profit element is required to be taxed. 12. Now regarding para 5 of your notice, in reference to sec. 2(22)(e), we beg to submit as under: 12.1 The query raised by you is in reference to, Murli F. Savlani and Harsh F. Savlani, copy of account of both the parties arc enclosed herewith alongwith shareholding list from which it is found that Shri Murli, F. Savlani is having 9.77% shareholding and Harsh F. Savlani is having 9.94% and, therefore, the provision of sec. 2(22) (e) not applicable. A copy of the account of above both shareholder along with the shareholding list is enclosed herewith ". 2.3 On perusal of the written submission, the CIT observed that a survey u/s. 133A of the Act was conducted on the assessee company on 11.07.2011 and during the course of survey, certain loose papers were found, inventorised and impounded. From the copy of impounded documents marked SEL-I to XIV, it was seen that during the F.Y. 2009-10 pertaining to A.Y. 2010-11 the company has made purchases from eight parties as mentioned above. The total purchases made from these parties amount to Rs. 23.....
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....ity of the supplier to provide us the goods at our premises. The charges of the transaction are to be borne by the supplier himself. We have received the copy of challans as a proof of delivery of goods at our premises. So, there is no requirement for us to keep the copy of truck/lorry receipt." 2.4 It is thus seen that neither the purchaser nor the seller has shown any transportation/octroi/delivery expenses. None of these concerns have shown any opening or closing stock in their statement of account filed with their return of income for A.Y.- 2010-11. None of these concerns have disclosed any bank A/c. in their Return of Income. Very negligible expenses have been debited by these concerns and whatever little has been debited is on account of salaries and wages/conveyance expense/audit fee/other expenses. All these concerns have opened their bank A/c. on same date i.e. 04.04.2011 in the same bank, Bank of Baroda, introduced by the same person. 2.5 According to CIT, the Assessing Officer has not made any enquiry with Sales Tax authorities whether these concerns were registered with them or obtained copy of their Sales Tax Returns to verify the transactions shown therein. This was....
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....penses debited in the name of this party was Rs. 1,21,20,767/-. Therefore, the CIT observed that the action of Assessing Officer in completing the assessment u/s. 143(3), despite the parties failed to comply with the notice u/s. 133(6) issued to them, despite the assessee failed to file the details in compliance to the final show cause notice and despite there being no documentary evidence submitted by the parties or assessee to establish the genuineness of these transaction, has resulted the assessment order passed u/s 143(3) on 30.03.2013 erroneous in so far as it is prejudicial to the interest of revenue. 2.6 Considering the narrated facts and circumstances, the assessment order passed u/s. 143(3) on 30.03.2013 by the Assessing Officer was found to be erroneous in so far as it is prejudicial to the interest of Revenue. Accordingly, the assessment order was set aside by the CIT vide his order u/s 263 dated 30.03.2015 with the direction to the Assessing Officer to frame the assessment afresh denovo. 3. Aggrieved by the aforesaid order of the Commissioner of Income-tax-2, Surat, the assessee is in appeal before us, inter alia, submitting that the CIT has erred in invoking the rev....
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.... 56, Poonam Nagar Society, Bhatar, Surat. During the course of survey, purchase bills were impounded vide files marked SEL-I to XIV. Furthermore the bills of these concerns were not having Sales Tax Number, VAT Number and GST Number. There were no transportation bills/lorry receipts/ delivery challans for good purchased from these concerns. These parties have sold goods only to the assessee company and to no other party. The total sales shown by these parties are the purchases shown by the assessee from these concerns. In other words these concerns have sold goods only to the assessee company in A.Y. 2010-11, 2011-12 & 2012-13. These concerns have debited negligible VAT/Sales Tax compared to the sales shown in their return of income. The Departmental Representative submitted that in Gujarat VAT/ST is 4% and the amount of VAT/ST shown to be debited in their profit and loss account by the concerns casts doubt about the genuineness of the transactions undertaken by these concerns. Moreover, these concerns have not shown any transportation/octroi/delivery expenses. In these background, the Departmental Representative submitted that the CIT was justified in observing that the Assessing ....
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....situation, the ITAT, Mumbai "A" Bench in the case of Ashokkumar Shivpuri vs. CIT, dated 07.11.2014, in ITA No.631/M/2014, held that the revision proceedings simply on the basis of proposal from the Assessing Officer is not valid, because section 263(1) says that "the Commissioner may call for and examine the records of any proceedings under this Act, and if he considers...." which means that proposal for initiation of revision proceedings must be initiated by the CIT. It is the CIT who has to call for and examine the records; but in the instant case the proposal came from the Assessing Officer and on receipt of the proposal, the CIT initiated revision proceedings, which is not justified as held by the Mumbai "A" Bench of ITAT in the case of Ashok Kumar Shivpuri (supra). For the sake of convenience, the relevant portion in the case of Ashok Kumar Shivpuri (supra) is reproduced as under: 16. We further find that the proposal was received by the CIT from the AO, which clearly means that there has been no independent application of mind by the CIT, because section 263(1) clearly says, "The Commissioner may call for and examine the records of any proceedings under this Act, and if he ....
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....ration the objection dated 09.02.2015, filed on behalf of the assessee, as enclosed in the paper-book page 28 to 33. Further, the CIT has applied section 263 merely on the basis of survey proceedings u/s 133A conducted on 11.07.2011 though the order u/s 143(3) subjected to revision dated 30.03.2013. The CIT's order is based only on same survey proceedings, but those findings were not found in place in the show-cause notice issued to him. The Assessing Officer has completed the assessment only after satisfying himself on the points raised before him during the assessment proceedings and after considering the detailed reply filed by the assessee before him and therefore, the CIT has no jurisdiction to invoke the revisionary powers u/s 263 of the IT Act, 1961. The Assessing Officer has duly applied his mind after raising specific query and questionnaires as stated above and argued before the CIT in 263 proceedings. For this the Authorized Representative for the assessee took us through the questionnaire dated 16.05.2012, which is placed at Page 74 to 77 as well as various annexures/papers filed in response to the same. Further questionnaire dated 18.03.2013 and its reply was filed on ....
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.... also issued summons to two parties to whom the assessee has paid job work. Therefore, it cannot be said that the Assessing Officer was unaware regarding survey proceedings and no enquiry has been made by him at relevant point of time. 5.4 The Commissioner may call for and examine the record of any proceeding under this Act, and, if he considers that any order passed therein by the concerned Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The CIT may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. It shows that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Assessing Officer is "erroneous in so far as it is prejudicial to the interest of the Revenue". It is not an arbitrary or unchartered power. It can be exercised only on ful....
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....a higher figure. It is because the Assessing Officer has exercised the quasijudicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that, in the opinion of the Commissioner, the order in question is prejudicial to the interest of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, namely, the order is erroneous, is absent. Similarly if an order is erroneous but not prejudicial to the interest of the Revenue, then also the power of suo motu revision cannot be exercised. Any and every erroneous order cannot be subject-matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to establish that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. In this background, CIT was not justified in revising the or....
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....lained cash deposits was made in respect of bank account in State Bank of Hyderabad. The CIT invoked jurisdiction u/s 263 on ground that there was failure on part of the Assessing Officer to make necessary verification regarding the deposits made by assessee in his bank account with Indus Ind Bank, and the assessment made by the Assessing Officer was erroneous as well as prejudicial to interests of Revenue and assessment order passed by Assessing Officer was set aside. In appeal, the Tribunal held that the entries in bank account of assessee maintained with IndusInd Bank were not only considered by the Assessing Officer, but source of deposits found to be made in said bank account as explained by assessee as the money received by him from his son and daughter in law in USA through proper banking channel was accepted by the Assessing Officer, after applying his mind. In this regard, it could not be said that source of deposits found to be made in the bank account of the assessee with IndusInd Bank were not verified by the Assessing Officer and there was an error in order of the Assessing Officer. If Commissioner contemplated that the Assessing Officer should have enquired into the s....
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....11) 332 ITR 167 (Del). Since all the parties are assessed to tax, inquiries were made, confirmations were filed and the order was passed u/s 143(3) after considering the survey report and other material; in such situation invoking provisions of Section 263 of the Act are not justified. 5.7. With regard to job charges, Avdhesh International and Harsh Fashion, inquiries were made u/s 133(6), but no original bill was found. In fact, bills were seized during the course of survey proceedings as per submission dated 22.03.2013. Both the parties are assessed to income-tax. So absence of original bills, which were lying with revenue at the relevant point of time, cannot be the sound basis for invoking provisions of Section 263 of the Act. Ahmedabad 'C' Bench of the Tribunal in the case of Hitendra A. Nanavati vs. CIT, reported in [2011] 135 TTJ 17, held that where the Assessing Officer was satisfied with the explanation of assessee regarding genuineness of credits on basis of confirmations filed by the assessee, a change of opinion or view would not enable Commissioner to exercise jurisdiction u/s 263. The ratio of this decision supports the contention of the ld. Authorized Representative....
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....umstances of the case the ITO should have made further inquiries before accepting the statements made by the assessee in his return. The position and function of the ITO is very different from that of a civil court. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. In the case before us, it is not the case of no enquiry, but may be the case of inadequate inquiry, which is not sound basis of invoking provisions of Section 263 of the Act. The other decision relied upon by the Departmental Representative is the judgment of Hon'ble Gujarat High Court in the case of Adani Agro (P) Ltd vs. DCIT, 32 taxamnn.com 356 (Guj.), wherein the assessee claimed set off of certain gain on sale of shares against unabsorbed speculation loss. The Assessing Officer allowed such claim. Subsequently, the Commissioner having found that the Assessing Officer had allowed assessee's claim without proper enquiry took revisional proceedings under section 263 and remanded the proceedings to Assessing Officer for verification of certain details before accepting assessee's claim. Tr....